What are the reasons for leaving Canada?
Many Canadians consider non-residency for several reasons, such as Career Opportunities, Business Expansion, Marriage, Tax Advantages, Retirement, Lifestyle Choices, Global Mobility (Working remotely), Family Reunification, etc. Each of these reasons can trigger non-residency status under Canadian tax law.
What is a Tax Residency?
Tax residency is not solely about physical location, but it depends on the residential ties maintained with Canada. By assessing primary and secondary residential ties, the government determines whether someone is a factual resident, non-resident, emigrant, or deemed non-resident.
What are Primary Ties?
These are strong connections, like your spouse or common-law partner who lives in Canada, or dependents like your children who are financially dependent on you, residing in Canada.
What are Secondary Ties?
These are considered weaker compared to primary ties, including bank accounts, health cards, pensions, and property ownership in Canada. The more secondary ties one holds, the more likely they will be considered a resident unless supported by a tax treaty.
What is Departure Tax?
If a Canadian tax resident or citizen is leaving Canada. He must file a departure tax return. You may be subject to a departure tax on your non-registered investments, except RRSP and TFSA. You can keep the registered accounts, but you must not contribute to these.
T1161: Report the properties over $25000. If you fail to report or file the T1161 form late, a penalty of $25/day up to a maximum $2500 plus interest
T1243: Schedule 3 and T1243 are required to deem-disposition of non-registered investments on their fair market value as of the departure date, e.g., Stock, Bonds, Crypto, etc.
T2091: If you own a principal residence in the year of departure, it must be deemed disposed of at its fair market value and claim the PRE exemption. If you fail to file, a penalty of up to $8000 may be applied.
Section 216 return if you have a Rental property: if you are renting a property, you must file a section 216 return to report the rental income earned after the date of departure in the year of departure.
File a departure tax return
You have to file a tax return by April 30th of the year following the year of your departure from Canada.
The purpose of this tax return is to: The date you leave Canada and change your residence status, Report property you own at the time you leave Canada, Prepare the appropriate tax election forms, Report and pay the departure tax or elect to defer payment of the tax by providing a sufficient guarantee to the tax authorities.
Let Calgary Tax Consulting experts file your belated return & claim your tax.
